The Fat Wallet Show with Kristia van Heerden

Podcast: What even is the stock market?

In Latest, The Fat Wallet by Kristia van Heerden

There’s nothing intuitive about the stock market. Most of what we discuss on this show relies on a basic grasp of the stock market, which is possibly asking too much. Every year I learn something new about the market. When I do, I get this horrible sense that everyone else already knew that and thinks me dumb for not knowing it. Sound familiar?

An email from Antoine made me realise we’ve never really devoted an episode to how the stock market works. This is one for your bookmarks folder. Here’s what we chat about:

  • What is the stock market?
  • What is it for?
  • How does it work?
  • Who are the players?
  • How do you make money?

Antoine is worried that the stock market is a Ponzi scheme. 

A bank can lend 10 time more money than is physically available. So out of ten dollars virtual value available, nine dollars are a bet on future growth, not on actual value. The same holds true for bonds and capital investments.

I’m really concerned that my children will become irrelevant, despite doing very well in maths and science. Investing in the almighty stock exchange might not save their souls. I’m hoping Simon might have something better than: “Because it worked for a hundred years.” I heard that gospel before.


Clean swearing bleeped out show is below.


Win of the week is Sebushi for sending such a happy email.

I have been listening to Fat Wallet for more than a year and encouraged my wife to listen as well. Last week she received an email from her employer Vodacom about their YeboYethu share and given three options to choose from.

With the knowledge we received from Just One Lap, it was easy to make not only a choice, but an informed choice.

Thank you guys for the your education it means a lot to me and my family. And thanks to Stealthy Wealth as I found about Kristia from his blog.

From your Number One Fan whose Tax Free, RA and Investments are in order.


Christiaan’s friends are worried about what a crash would mean for those close to retirement.

My friends’ parents are in their 70s. They’ve managed their finances well, are still able to work and live off what they earn. They still save.

They’re worried what a next crash might mean for their savings.

What’re your thoughts on the Warren Buffett approach in his will to his wife of 90% in the S&P 500 and 10% in bonds?


Rob is about to receive an inheritance.

I am married and on the verge of starting a family. We currently live in a townhouse which we are paying off. We both have RAs to to which we contribute monthly, and also invest the max each month into our TFSAs. We are about 3/4s of the way towards having a fully topped up emergency fund.

I have also received a nice bump in my monthly pay and plan to invest as much of this as possible into EFTs.

We do potentially want to look a buying a house as we will need the space with kids and it’s nice to own somewhere with a garden.

So basically my question is, what would be the best way to use this lump sum to insure financial security for a growing family?

Would it be a good idea to try and pay off the bond on the townhouse and then rent it out and use the money to fund a bond on the house? Or buy a house cash and the rent out the townhouse as a passive income? If we go this route, would it better to keep it all under one bond?

Or should we just sell the townhouse and buy the house and not worry about having a rental property?

Or is the property idea just a bad one all around?

Is the best use of the money to clear all our debt before we start worrying about investments?

Should we just invest the money and use the interest to pay off debt? Where would be the best place to invest to avoid income tax?

I have only recently started listening to your podcast so if there are other episodes that answer my questions then could you point me in the right direction?


Jonathan sent such a great email. 

Hi legends

Give me a 3 minute for and a 3 minute against endowments, assuming fees aren’t bad.

Hooray!


Tim wants to claim back a loss from SARS.

I invested into a scheme that now appears to be a fake scheme (money does not get paid out) am I able to claim the loss against my tax return? If I had made a profit SARS would have asked their share, so surely the inverse must work and if so what proof would i need to substantiate this?

I fortunately on put a bit of FU money in that I could lose (any loss sucks), unfortunately it seems others may have put a lot more in…, so once the dust has settled and I know the outcome ill send a mail as a lesson for all.


Alexander has questions about investing for minors. He wants to know what would happen if family members contributed to a TFSA for a minor and accidentally went above the R33,000 limit.

Would the platform block the transaction (I use EE) or would someone be liable to pay a fine (presumably the legal guardians of said child). It seems better to have a bank account people deposit into and distribute from there.

We want to open an investment account for our godchild, not a TFSA. How would tax around this work? If anything is withdrawn before the child can be a registered tax payer (medical emergency or something), would the parents be responsible for the tax liability, or us?


Shaunton wants to know how the 27.5% tax rebate works for people who work for themselves.

Does this limit also apply if you have your own business, independent contractor? Or how does it work?


Bongani is concerned about capital appreciation due to rand depreciation.

Rand depreciation means capital gain for me as a south African investor on dollar-based ETFs.

If I were to invest in a JSE-listed ETF, the rand depreciation would be considered capital gain and I would be liable for tax. If I buy the MSCI World etf from Vanguard as an offshore investment, would the rand depreciation also be considered capital gain and I be liable for capital gain tax?


Kobus wants to know if higher tiers are worth the rewards.

I’m trying to compare rewards programs of different credit cards. Is it worthwhile to go for a higher tier status so that you can get a bigger rebate on petrol? It seems that there is not one reward program that is the best. Is it best to ignore these reward programmes altogether?

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